Interesting Videoclips of the Week (February 19 – February 25)


Editor’s Note:  In this series of articles, we include important or interesting videoclips with our comments. Our Web Software does not permit embedding of the clips into our articles. So we shall have to be content to include the links to the actual videoclips. We are very happy with the tremendous response from readers to this series of articles. We thank them sincerely and profusely.

This is an article that expresses our personal opinions about comments made on Television and in Print. It is NOT intended to provide any investment advice of any type whatsoever.  No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerances. 



Now Libya

Libya is the scariest conflict to date and one with more long term complications than either Egypt or Bahrain. A violent civil war seems to be unfolding, one that might leave the country splintered for some time. The Libyan Military, with a history of factionalism, seems to be breaking down along tribal lines.

How thrilled must Osama Bin Laden be? How excited must Ayman Al-Jawahiri be? Egypt & Libya are former playgrounds of Dr. Al-Jawahiri. Will an unintended consequence of America’s policy be a rise of Al Qaida in the Middle East? For a detailed discussion, read our article Strange Bedfellows – Saudi Arabia & Israel vs. Iran, Bin Laden & USA?

What mattered this week is the situation in the Middle East. The relative stability of Iran and Saudi Arabia will be a major factor for the stock market. So our first clip provides a non-consensus view point about the Iranian regime and our second clip provides some evidence of the broad support for King Abdullah in Saudi Arabia.


Stock Market – Finally It Mattered a bit

We have used our Ernest & Julio Gallo paraphrase for the stock market on several occasions, the latest being last week. Despite the problems in Tunisia, Egypt and Bahrain, the stock market refused to react. Then this week, Libya happened and the Stock Market paid heed.

Why? Was it the prospect of another Oil Crisis beginning with Libya and rippling towards Saudi Arabia? That seems a reasonable assumption because the stock market stabilized and the Oil (& Gold) market reversed when Saudi Arabia reassured the world that it was ready to make up any short fall from the Libyan shutdown. The massive celebration in Riyadh upon King Abdullah’s return also calmed nerves and laid to rest, at least temporarily, any concerns about  a revolt in Saudi Arabia against the ruling family.

Or was it simply an overextended market finally pausing to rest? And was the rally on Friday a bounce from a severely oversold market?

What Are the Gurus Saying?

Last week is history. What about next week and beyond? BlackRock’s Bob Doll opined that the Worst May Be Over . He practices fundamental analysis. Tom DeMark, the veteran technician, said “everything is in place, it is all coincidental right now” for a 11.2% decline in the S&P 500 and perhaps a 16.8% decline to 1,200 on the S&P. CNBC’s Bill Griffeth asked Mr. DeMark about his earlier & early call in January and Mr. DeMark answered it candidly. Kudos to them both. How we wish all anchors and guests demonstrate such candor?  

Walter Zimmermann opined that the Dow could get to 9,000 with the first support at 10,670. Readers might recall that Mr. Zimmerman made an even more strident call on September 9, 2010 when he told Maria Bartiromo ” we are talking about Dow basically falling from 11,000 area to the 6,800 area sometimes in October to perhaps by early January, that what we see as the risk.” (see clip 2 of our Videoclips Article for September 4 – September 10 , 2010).

Well, that call proved spectacularly wrong. But we understand. The QE2 medicine of the Ben Bernack was strong enough to blow away any and all technical tea leaves. Mr. Zimmermann 2010 calls of a major Dollar bull market, of a calamity in High Yield Bonds also proved wrong. But that was last year. What about this year? On February 8,  2011 Mr. Zimmermann sounded alarm about a sell off in Bonds. We recall he warned of a major rise in interest rates to come. He seems to have been rather wrong in this forecast as well.

Frankly, we are disappointed with Maria Bartiromo. We expect Anchors to warn viewers about terribly wrong calls by Guests and we expect Anchors to ask Guests the reasons their calls went awry.  But Ms. Bartiromo did neither in the case of Mr. Zimmermann. She gave him a free pass for his bad calls.
Last year, we were critical about Ms. Bartiromo because she let awful calls by her bullish guests go unchallenged. Now we have to be critical about Ms. Bartiromo when she allows terrible calls from her bearish guests unchallenged. So we throw a flag for her lack of proper journalistic conduct.

On the other hand, we are also pleased with Maria Bartiromo. In last week’s article, we reported that at 3:36 pm on Friday, February 18, Ms. Bartiromo triggered our proprietary Maria indicator, not the old reliable but its new reincarnation. The mark on this signal was 134.24 on the SPY. Any one who shorted the stock market based on our indicator made money this week. Thank You, Ms. Bartiromo.

As an aside, allow us to clarify that we consider our Indicators to be a compliment to Ms. Bartiromo. They reflect her passion for the stock market. We use these because they have proven to be empirically predictive.

Later in this article, we shall reveal another celebrity indicator that has worked very well for us.


US Treasuries & Munis


The US Treasury market enjoyed a much needed and much overdue rally this week. The 30-Year Treasury Bond was the star as it usually is. Is this just a flight to safety or the start of something real?

David Rosenberg argues that the Bond Market is sending a deflationary signal. Watch or read his comments in clip 3 below. RBS came out with a technical call for a 40 basis points decline in yields from Friday’s level, a level that already reflects a 20 basis point rally for the past couple of weeks. Readers may recall that Jeff Gundlach had talked about a potential drop in 10-year yields to 3%, about 42 basis points below Friday’s level.

Wasn’t it a couple of weeks ago when news came out that Mr. Gross had reduced his weighting of Treasuries to its lowest level? This allows us to describe our proprietary and hitherto private Bill Gross indicator. It has been our empirical observation that the Treasury Market begins a rally two-three weeks after a trashing of Treasuries by Mr. Gross. We have used this indicator since 2006-2007 and it has worked for us. Why does it work? Ours is not wonder why? Ours is but to do and profit in a rather awful paraphrase of Tennyson.

It was nice to see a strong rally in Munis this week. The 10-year Muni was up by almost 1% for the week. The Illinois bond issue was a blowout according to Blackrock’s Peter Hayes and the rally in long term Treasuries also helped. This Muni rally shows the validity of another indicator – if they go up on bad news, they should be bought. On January 21, the New York Times reported that a plan was being discussed to allow states to declare bankruptcy. Munis should have sold off on that news. Instead they rallied leading us to discuss this indicator (see a longer discussion in our Videoclips of February 5 – February 11 article).


Our Call for a Fast Money Morning Report

We renew our call (first made on January 1, 2011) for a Fast Money Morning Report at 8:45 am. The action in overnight markets is getting more and more relevant. The economic data is also showing a turn. We would all gain from a 15 minute Fast Money report that covers the overnight action and makes recommendations for the open.

As an added benefit, it might wake up CNBC’s Squawk Box from its stupor. They tend to waste the 15 minute slot from 8:45 to 9 am. Witness the ridiculous exercise of Carl Quintannia and Becky Quick  propping up Mr. Cashin’s ego on Thursday, February 24 . And they called it Trader’s Edge. We remember there was a time when we listened to Art Cashin the way we listen to Rick Santelli. Those days are long gone. Now Becky Quick is reduced to reassuring Mr. Cashin that he was the first one on earth to think of the Bahrain connection to Saudi Arabia and Mr. Cashin is reduced to accepting this ridiculous accolade as his right. Nicely done CNBC Squawk Box. What a way to add value to CNBC’s Viewers?


Featured Videoclips


  1. Hooman Majd on CNN’s Fareed Zakaria GPS on Sunday, February 20
  2. CNBC’s Ross Westgate on Saudi Arabia on Thursday, February 24
  3. David Rosenberg on Bloomberg’s InBusiness on Friday, February 25

1. Hooman Majd on Fareed Zakaria GPS – Sunday, February 20

This clip may be controversial to many readers. It flies in the face of the consensus on Iran.  Mr. Majd is the author of “The Ayatollah Begs To Differ”. The other guest is Karim Sadjadpour of the Carnegie Endowment for International Peace. His views are closer to the consensus.

We include excerpts from the transcript posted on  transcripts.cnn.com. We could not find the actual clip on the show’s website. So we shall be content to provide a link to the complete transcript


  • MajdI mean, first of all, I think we have to remember, I mean, I would agree and it’s impossible to predict what the long-term future of Iran is. But I think the thing to remember about Iran today is the regime, (INAUDIBLE), the system, whatever you want to call it, has a lot of support. Still has a tremendous amount of support.
  • ZakariaDescribe the support.
  • MajdWell, the support is obviously among the (INAUDIBLE). I can’t give you numbers. I have no idea what the numbers are, but it still has a tremendous amount of support, including President Ahmadinejad himself, who still has a tremendous amount of support.
  • ZakariaYou think the regime has a lot less support than meets the eye?
  • SadjadpourYes. I would disagree with Hooman’s characteristic that it has tremendous support. I think there’s a couple of barometers. If it did have a tremendous support, they would allow journalists like yourself to go there and report. It will allow other reporters to go there and see what’s happening. And I think they would allow people to freely assemble and see what happens. But what I would say is this, I don’t think that they have very wide support, but I think the support they have is deep, meaning they have people who are very willing to kill and potentially die on behalf of the regime. And I think that was one distinction between the Islamic Republic and Egypt’s Mubarak, meaning, the breadth of their support I think is fairly similar, but I think far more Iranians are willing to die.
  • Zakaria – Why? Why is that?
  • SadjadpourWell, I think that, you know, it’s easier to compel people to kill on behalf of Islam than it is to kill on behalf of retaining Mubarak republic. The other thing is, I don’t think people in Iran necessarily wake up in the morning thinking about democracy and thinking about human rights and thinking about having a secular system. But they do wake up in the morning thinking about the economy. Younger generation thinks about employment opportunities, older generation thinks about economic dignity. And if — if this regime — this Islamic Republic didn’t provide people political freedoms, didn’t provide people social freedoms, but they delivered on the economy, then I would agree with Hooman that they would have tremendous support. But when you deny people social freedoms, you deny people of political freedoms and you terribly mismanaged the economy, I’m not sure really what redeeming qualities this regime has.
  • ZakariaHooman, when you look at what happened in Egypt and how Ahmadinejad tried to take credit for it and talked about as an Islamic awakening of sorts. He must be embarrassed by these protests. This must be awkward.
  • MajdI don’t think he is. I don’t think — neither he nor the — not the ayatollahs who have taken credit or have said that this is a, you know, a continuation of the Islamic revolution. No, because they realize in my — the way I see it, they realized that whatever happens in Egypt, whatever happens is going to be beneficial to Iran and not beneficial to the United States.
  • ZakariaWhy?
  • Majdin a long term. Because they feel that a democratic — even if it’s — if it’s a democracy like Turkey, which is a best case scenario for — as far as we are concerned or as far as Israel is concerned, that is still beneficial to Iran. Iran and Egypt have had very bad relations. No diplomatic relations for over 30 years. Practically enemies. And whatever happens, the will of the people and if the will of the people in Egypt is reflected in the leadership, then it’s going to be beneficial. Maybe only marginally beneficial, but even that marginal benefit is something that they would take great pride in. And say, look, as we see, whether it’s Egypt, Tunisia, Yemen, Bahrain, now we’re seeing all (INAUDIBLE).
  • ZakariaDemocratic Arab countries will be more pro-Iranian or (INAUDIBLE)?
  • MajdI don’t, right now, no. I don’t — I don’t see that. I think that there’s a — there’s real dilemma for the leaders of the Green Movement. And, you know, they said that this was — and these protests were going to be in support of the Egyptian people. What they turned into, which is what the government had always said they were, was an anti-regime protest, not just anti-Ahmadinejad protest, anti-regime process.
  • Zakariais, you know, they have the majority support. Why not let the minority –
  • Majd – Absolutely. But the view of the — of the people in power in Iran, is that at a time, when the National Security of Iran is threatened by Israel, is threatened by United States, when they’re (INAUDIBLE) of war that the country should bond together. This is their view.
  • ZakariaHow would you respond finally this war?
  • SadjadpourWhat I would say, Fareed, is that the predominant narrative of the last three decades in the Middle East has been about Arabs being inspired by Iranian theocracy. Suddenly, that’s been turned on his head. We’re now talking about Iranian being inspired by potentially Arab democracy. And for me what’s interesting is that, you know, I traveled a lot in the Arab world. I live in Beirut. I go frequently to Cairo. And whenever I go to the Arab World, I tell people I’m Iranian. They always start to praise Ahmadinejad. I think what we’re seeing now is that Arab popular support, expressions of support for Iran are akin to Latin America populist support for Castro’s Cuba in the ’60s and ’70s. European Intellectuals Popular Support for the Soviet Union in the 1950s. Iran is this defiant political order, which they admire from afar but which they don’t wish upon themselves.
  • ZakariaOn that note, Karim, Hooman, a fascinating discussion. We will of course follow it.
The emphasis in the above excerpts is ours. These comments in bold lend credence to the contrarian story that Iran looks to be a winner in this restructuring of the Arab world that we are witnessing.  

Think about what Mr. Sadjadpour said above – that there are lots of people who are willing to kill or die for the regime and that it is easier to get supporters to die for their religion than for a dictator. This is why Iran & Saudi Arabia are so different from Egypt, Tunisia, Libya and Algeria.

We tend to concur with Mr. Majd’s analysis of the broad support of the Iranian regime. We believe that the majority of Iranian people are pious and religious. We think they are far more likely to support the Ayatullahs than support the college educated urban class that wants to be like Europeans or Americans. As Joe Scarborough of MSNBC told us the evening before the 2004 Presidential Election – you can always count on the middle aged and conservative people to show up but you cannot rely on the youth. In a real battle between the religious middle aged majority of Iran and the educated urban youth of Iran, we would bet on the religious majority. Just look at Pakistan.

Now that is totally contrary to the bet George Soros made in the same show. He said to Fareed Zakaria :
“I would like to bet that the Iranian regime will not be there in a year’s time”. We hope he is right but we doubt it.

So here is a real question for the readers?
Which regime would disappear first – Iran or Saudi Arabia? The answer to this question would govern macro investing for a long time. Perhaps, one of our friendly CNBC Anchors will make this a poll question next week. In the interests of public good, we hereby allow them to use this as poll question without giving us credit.

But before you cast your vote, listen to the next clip about Saudi Arabia.


2. Party Atmosphere in Saudi – CNBC’s Ross Westgate from Riyadh
(03:49 minute clip) – Thursday, February 24

Ross Westgate of CNBC Europe traveled to Riyadh and he reports on the reaction of the Saudi Youth to the return of King Abdullah of Saudi Arabia. 


  • This is in Riyadh, the capital. Last night the King had returned and it was like a carnival, a party atmosphere. People in cars, honking horns, a three mile traffic jam, national flags… I got out and I spoke to people on the ground and said “What are you celebrating? Why are you happy and they looked me in the eye and told me “Our King has come back. We are happy”. The idea to these people that they may want some kind of regime change would be complete anathema….It was kind of revelatory to see, if they felt the same way as they do in Riyadh across the country, the deepest fear of the oil markets would not be realized. But of course that is an if. Because we cannot vouch, no one can, for what other people feel in other parts of the country, particularly of course with the Shia minority over in the east side of the country where oil wells are. There is perhaps a difference between the Shia minority there and those in Bahrain. Bahrain which most people are fearful of because  if Bahrain has to make concessions politically, then a lot of people here would say why can’t we have the same ones too? The Shia have been economically better off than they were 15 years ago. They have been given money, Saudi Aramco has made sure that they have been fully employed.
Well, there is a huge difference between the Shia in Bahrain and the Shia in Saudi Arabia.The Shia in Bahrain are 70% of the population and are fighting a minority Sunni ruling family. The Shia in Saudi Arabia are only 20% of the population, a deeply religious Sunni population, a population that created Osama Bin Laden, a population that funds Al Qaida and the Taleban, a population that is at its core Wahabi Islamist. We doubt that the Shias in Saudi Arabia would willingly incur the wrath of the majority Sunnis in Saudi Arabia.

The real risk to Saudi Arabia is the transition to a younger member of the royal family. King Abdullah is 87 years old. The Crown Prince Sultan is 84 years old. So the question of succession looms large.


3. David Rosenberg on Bloomberg’s InBusiness 
(08:10 minute clip) – Friday, February 25

David Rosenberg is Chief Economist of Gluskin Sheff and a guru we like to listen to, sometimes with a single malt in hand to avoid getting depressed. But then we think of money to be made in 30-Year Treasuries and the single malt tastes great.


  • BrennanDavid Rosenberg says the Bond Markets are telling a story; it is not a pretty one right now….We are in the middle of a global recessionary shock potentially.
  • RosenbergWe have see the peak of the stock market and we are going to go through a corrective phase over the course of the next few weeks.
  • Brennanwhat are you seeing in the bond market right now?
  • Rosenbergthe rise in oil is a exogenous global deflationary shock…what is very important here from the Bond market’s perspective is that ordinarily if this was an oil price shock driven by surging demand the Bond yields would be going up and it would be viewed as something that was inflationary..the reality is that in the past few weeks the long bond yield is down almost 30 basis points..So the Bond market is sending a very important message…. that this is deflationary shock and that it is going to crimp economic growth over the next several quarters…
  • Brennanyou said…a $10 rise in the price of oil shaves about 1/2% off of GDP, is that the right formula?
  • RosenbergI think it is anywhere between a 1/4% and 1/2%..all these accelerating spending cutbacks in state and local governments…if there is any meeting of the minds to avoid a Government shutdown as the Debt ceiling looms..we are going to go …quickly to fiscal contraction..
  • RosenbergAfter the US consumer, the second largest contributor to the US economy is state and local governments..it is 12% of GDP..and it cuts a wide swath in terms of the impact it has on business services in general….the fiscal year for state and local governments starts in July…the second half of the year is going to be a dramatic slowing in growth..
  • Brennanone of the theories floated by some including Mohamed El-Erian of Pimco that we are going to be in a stagflation environment, we are not seeing wages rise, we are seeing prices of commodities go up..are we at a risk of that?
  • Rosenberg I don’t see a classic stagflation environment…we have inflation in commodities true, principally we have it in energy and food, but I think this is more of relative price shock.. I think this is going to stay limited to commodities….the unbelievable amount of slack we have in the labor markets, I mean, an under-un-employment rate of over 16%, …the price rises are going to get bottled up in negative real incomes of households, unless we get another round of fiscal stimulus…so people are going to end up spending more of their budget on food and energy, less on other things like fun items …so I think the prices of discretionary items are probably going to disinflate or deflate..and so we are going to be left with a shift on relative pricing…..the last time this happened was in 2008 when stagflationists were out …a year later inflation was zero…so go figure…I am not in the stagflation camp, sorry.
  • Brennan (laughing) – you are passionate about that!
  • RosenbergWell, the Bond Market tells the truth..Bond Yields are sending a very important message..it is telling you that this is going to be more of deflationary shock on the the rest of the system outside of commodities..
  • BrennanSo has the rate hike moved even farther down the line here in the US?
  • RosenbergBen Bernanke told us a couple of months ago that he doesn’t expect the US labor markets to really head back towards normality, I think he said, in 4 years. And to me that is what the Fed is focused on, they are focused on the labor markets, so they are not raising rates for a long long time..we are talking years before they start to raise interest rates.

hmmm! What happened to Margaret Brennan of a week ago when she called US Treasuries “the least dirty shirt” and complained that US Treasuries were forcing her to change the thesis again and again (see Clip 2 of our Videoclips article for February 12 – February 18 ).

For a report of the comments of Mohamed El-Erian and his concept of a “new wind, a wind of stagflation”, read the article Investors Should Use Oil Price Increase Wisely: El Erian on CNBC.com or watch the clip Oil’s Market Muscle.



Send your feedback to editor@macroviewpoints.com

Leave a Comment

Your email address will not be published. Required fields are marked *


*